1. Explain, using examples, how you could use analytical procedures in assessing the risk of material misstatement of sales revenue.

2. What are some possible explanations of a change in the gross profit margin? How could the auditor investigate which of these explanations is the most likely cause of the change in the ratio?

3. Why is it important to maintain professional skepticism when gaining an understanding of related party transactions?

4. Why is it important that an audit committee not have any executive directors as members?

5. Why does an auditor need to understand a clients IT system? Explain how IT affects the financial statements.